Tax Law (Questions About Taxes)/Payroll tax nexus

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Expert: Randall Klein, MBA, EA - 1/4/2013

QuestionHello,

I'm not sure if this is the right place for this question, so I hope you can help! I currently work from home for a company in another state. I want to work from a rented space in St. Thomas, Virgin Islands for a temporary period. I will be there for only a few months so I won't establish residency. My company said that this would cause an issue with payroll tax nexus laws. Considering the short duration and non-residency, is this really the case?

Any insight would be great.

Thank you!
Holly

AnswerIf you work while a resident or temporary resident of the USVI, you will need to pay taxes as a resident in that territory.

While US law prevails in the USVI, it is a parallel tax system, but not the same system the IRS uses for the main US. There are special filing considerations.

It does not matter if you work there for 2 weeks or 2 months unless you are on a short-term business type trip, you are subject to USVI taxes and withholdings.

Randall Klein, MBA, EA

Expertise

I am an expert in personal and small business taxation, including Forms 1040, 1120, 1120S, 1065. I can answer any type of tax question except those that are requesting help in illegal tax evasion. Tax avoidance is legal, however. I do not do offshore trusts, or opt-out of the tax system type of queries.

Experience

25 years real experience in dealing with tax preparation, representation before the IRS, tax problem resolution, and more. Successfully represented clients in Offers in Compromise with more than 95% of all offers accepted.

OrganizationsNational Association of Enrolled Agents
National Society of Tax Preparers
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